Consequences of ERC Fraud

Under Investigation for ERC Fraud in Boston? Learn About the Criminal Penalties at Stake in Your Case

Federal law enforcement authorities are targeting recipients of the Employee Retention Credit (ERC) in Boston and other major cities across the country. Federal audits and investigations have revealed widespread ERC fraud, and the Internal Revenue Service (IRS) and other agencies are now seeking to prosecute those who improperly took advantage of this short-term pandemic relief program.

While some businesses (and business owners) are facing civil tax audits related to their ERC claims, many are facing criminal charges. In some cases, tax audits are leading to criminal investigations as well. The U.S. Department of Justice (DOJ) is prosecuting targeted entities and individuals for a wide range of federal crimes—all of which carry substantial penalties. A knowledgeable Boston tax fraud lawyer can help you deal with such issues and more.

Examples of Potential Criminal Charges and Penalties for ERC Fraud

Below, our IRS criminal tax attorney provides some examples of potential criminal charges, and the associated penalties, in federal ERC fraud cases:

Tax Fraud and Tax Evasion

ERC fraud investigations can lead to prosecution for tax fraud and tax evasion. Under the federal tax evasion statute (26 U.S.C. Section 7201), business owners can face up to a $100,000 fine and five years of federal imprisonment, while businesses can face criminal fines of up to $500,000.

Major Fraud Against the United States

Knowingly executing (or attempting to execute) a scheme or artifice with the intent to defraud the United States is a serious federal crime. Under 18 U.S.C. Section 1031, individuals accused of perpetrating (or attempting to perpetrate) ERC fraud can potentially face up to a $1 million fine (in most cases) and 10 years of federal imprisonment.

Mail Fraud and Wire Fraud

The federal mail fraud and wire fraud statutes (18 U.S.C. Sections 1341 and 1343) allow for criminal prosecution in a wide range of scenarios—including virtually all scenarios involving alleged ERC fraud. In most cases, mail fraud and wire fraud charges carry up to a $250,000 fine ($500,000 for businesses) and 20 years of federal imprisonment. However, in cases involving presidentially declared emergencies, the maximum penalties increase to a $1 million fine and 30 years behind bars.

Money Laundering

Engaging in any transaction intended to conceal or obscure the source of illegally obtained funds (i.e., an ERC refund) can lead to federal money laundering charges under 18 U.S.C. Section 1956. In most cases, federal money laundering charges carry up to 20 years in prison and a fine of no more than “$500,000 or twice the value of the property involved in the transaction, whichever is greater.”

Conspiracy

Business owners, business associates, family members, accountants and other individuals accused of playing almost any role in alleged ERC fraud can face federal conspiracy charges under 18 U.S.C. Section 371. These charges carry up to a $250,000 fine and five years of federal imprisonment.

Speak with a Boston Tax Fraud Lawyer at Thorn Law Group 

If you need to know more about the risks of facing ERC fraud allegations in Boston, we encourage you to contact a Boston tax fraud lawyer promptly. Call 617-692-2989 to arrange a confidential consultation with IRS criminal ERC attorney Kevin E. Thorn, Managing Partner at Thorn Law Group.